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Trickled to Death – The Fight for Increasing the Minimum Wage

I once dated a son of a socialist (and oh that he was) who delighted in telling me that all employees are necessarily exploited by the very nature of the capitalist boss-employee relationship. I think that’s basic Karl Marx. At the time I was pretty much fresh out of grad school with an MBA in finance and minor in economics, and quite honestly I was flabbergasted by the very idea.

“That’s not true!” I sputtered. “It’s a trade-off.” You know…the worker gets a salary without having the burden of managerial decisions. That’s not exploitation – it‘s choice! The worker could always choose to be a boss, but he instead opts to let someone else do that so his life can be the way he prefers. Clearly there’s a value (measured in utils by economists I think) to a worker not having to carry that extra burden. Therefore it’s not exploitation at all – it’s simply balance. Really. I believed this. And I voted for Reagan. We were all young once.

I also bought into trickle down theory at the time. All my book learnin’ told me it made sense. Of course, I forgot to pay attention to the word “trickle” – which I now see plainly warns that it will be really slow and by the time the stuff gets to the bottom, the effects will most likely be watered down.

But wait…I hear some of you screaming “a rising tide carries all ships!” Yeah…but the bigger ships get more of the fish. The smaller ones get the minimum wage.

And that brings me to today’s topic. There is a heated debate going on in the Senate about the minimum wage. The House passed their bill to increase the minimum wage a few weeks ago, but it’s gotten bogged down in the Senate – with the help of lots of amendments Republicans are tacking on to try to kill the bill. And what are the amendments aimed at? Tax breaks for poor, downtrodden big business, of course.

But wait…I hear those voices again. Jobs will be lost. Inflation will kick our asses like it did in the late 70s. God save us from the blight of paying workers at the bottom of the pay-scale a decent wage! This proposed increase only tries to keep up with inflation – it doesn’t even try to bring people up to a living wage.

I don’t want to turn this into a book, so I won’t belabor the arguments. But there are studies that show slow increases in the minimum wage (as the bill is written) do not result in lost jobs or inflation. In fact, some states have seen economic gains from an increase. Yet we are left dreading the cataclysm that will befall us if the increase goes through.

Basically we’ve been fed a lot of hogwash that plays to our greatest fears. (Where have we seen that before?)

Now let me concede that small business does have to carefully watch its payroll and any increases in wages can lead to some tough decisions. But in a large number of cases, they are already paying above minimum wage. I think their needs should be recognized and solutions found. This doesn’t mean the whole idea of a minimum wage increase has to be thrown out.

And even granting that all these arguments are valid and deserve further scrutiny, the bottom line for me comes down to this: The current minimum wage is $5.15. That’s $206/week for a 40-hour week, about $885/month, and $10,740/year. Now how many of you can get by on $885/month? Do you remember what it feels like to worry whether you can afford to eat at the end of the pay period before you get the next check?

After 10 years with no increase, can’t we at least catch people up to inflation? This is a wealthy nation filled with good-hearted people. Why should 13 million people (the estimated number on minimum wage) be denied a simple increase that just aims to adjust their wages for inflation? And contrary to what we hear, they are not all young students or workers in their first jobs. Many of them are your neighbors trying desperately to just live a decent life, maybe working two or three jobs to do it.

It’s too easy to let carefully-crafted and cleverly-placed “information” scare stories (which have become part of media “facts”) inflame fears that an increase will destroy our economy. But can you live with so many people falling further and further behind? Sure we have to compete with other countries that have much lower wages, but does that mean we have to do it on the backs of our workers?

I truly believe we are smart enough to find other solutions that will help bolster the domestic economy. Why are we focusing on the people with the least power to defend themselves rather than stepping up to the challenge of fixing a structural economy that is truly broken.We need to be talking now about the real problems and not blaming those who have so little. This is the debate I want to hear.

Meanwhile, let’s give our workers an oh-so-needed increase and give them a chance to at least participate in what John Edwards likes to call trickle up! I’ve come to realize that workers will almost always feel exploited by the disparity of power, but do they also have to be screwed?

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Click here to be taken to crooksandliars.com to hear a clip of Ted Kennedy’s stirring Senate speech from 01/26/2007 asking “When does the greed stop?”

UPDATE: On February 1 the Senate passed their version of the minimum wage bill with amendments for small business tax cuts and certain limits on corporate pay. Now the Senate and the House have to find a bill they can both approve, with the House wanting the bill to be “clean” (amendment-free.) Those in support of the amendments say similar concessions were passed the last time the minimum wage was increased. The politics continue as those most in need wait to see what happens.

I respect your opinion. And having been a waitress many moons ago there is almost nothing worse to me than a bad tipper. In fact when someone sent me this, I wasn’t sure I wanted to listen because I am so sick of all the same-old same-old rhetoric that gets us nowhere.

But I have to tell you, whether you admire Ted Kennedy or not, this speech has the kind of passion and simple sense that is all-too-often missing from our homogenized politicians. And he wasn’t afraid to use the “g” word. (Greed.) That’s why I included it. At least he’s standing up to a silly game being played at the expense of those who can least afford it. I hope many others that you do admire (in both parties) join in. This is about common decency.

Oops. Excuse my rant. I just know that in New York City the subway is $2. Five round trips a week is $20 – 1/10 of a minimum wage paycheck before deductions. And they’re playing games with amendments??? Ugh!!!

Lately, I’ve been wondering why, in all those discussions of trickle-down theory, they seem to so readily discount “trickle-up” theory. Hasn’t all the rest of the money thus far seemed to migrate up the ladder? So, if you want to stimulate the economy, shouldn’t you give the breaks (and therefore the money) to the folks who have shown a consistent propensity to spend it–soit could then make its up way to the top of the ladder (much faster, I’m sure, than it does on its way down).

I once had an economics professor who told us how economists gathered yearly to compare their GNP forecasts – with predictions ranging all over the place. He wanted to make sure we understood just how much economists don’t understand. You can pretty much find one to support any side of this discussion.

That said, I am hardly a trained economist – only minored at grad school. But I do know that the much-touted perfectly-functioning free-market economy doesn’t exist. Just look at all the tax breaks, subsidies, tariffs, quotas, embargoes, duties, etc.

And even if the free market did exist, if I see people suffering, then I want my government to step in and help find a solution. Theory is not the same as food on the table.

FYI…human labor in economic models pretty much treat people as mere commodities – which we are not. There are too many variables involved in labor economics to say let the people fend for themselves when things get so out of whack. And clearly, corporations need a little help rebalancing their wage structures – not only at the bottom, but the top.

But…as to your suggestion about a COLA of some sort keeping the minimum wage in synch with inflation, I like the idea taking it out of politics and building in some automatic increases. I believe a lot of studies show that small increases are more easily absorbed by the economy. I don’t know enough to come up with all the arguments against, but it sure is an appealing solution in theory. Worth exploring.